PILOT reauthorized after debate

The reauthorization of the 2013 payment-in-lieu-of-tax (PILOT) program was recently approved by Oak Ridge City Council, but not before some Council members tried to OK the program for only six months so they could get some additional information from the city’s Industrial Development Board.

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By Beverly Majors/The Oak Ridger

Oakridger - Oak Ridge, TN

By Beverly Majors/The Oak Ridger

Posted Nov. 19, 2013 at 5:29 PM

By Beverly Majors/The Oak Ridger

Posted Nov. 19, 2013 at 5:29 PM

The reauthorization of the 2013 payment-in-lieu-of-tax (PILOT) program was recently approved by Oak Ridge City Council, but not before some Council members tried to OK the program for only six months so they could get some additional information from the city’s Industrial Development Board.

The PILOT program is used as an economic incentive by the IDB as a guideline for tax abatements and payments in lieu of taxes for qualifying business projects. The program was set to expire on Dec. 31.

The IDB Special Projects Committee, which is comprised of members David Mason, Lou Dunlap and Buzz Patrick, with assistance from city staff member Susan Fallon, reviewed the program policy and guidelines, made no changes, and made the recommendation to approve to the IDB. The IDB approved the recommendation during a meeting in October. The PILOT does not require funding.

During the recent Council meeting, member Trina Baughn requested an annual report from IDB on the program’s successes or failures before voting.

“I’d like to see some data, some measurable success,” Baughn said.

City Manager Mark Watson said the policy pertains not only to the city, but also for Roane County entities such as the Roane Alliance, and “you don’t want to lose it at this time.”

Council member Chuck Hope said Council should maintain the program “for now,” but also asked the IDB to “bring something back” that is “investment measurable.” However, he said when the policy was revised several years ago, “we tried to put measurables in then.”

IDB Chairman David Wilson said the “IDB is a tool to create jobs and the tax base.”

The IDB chairman said the board could provide more information, but cautioned Council about delaying the program.

“I remind you it (policy) expires on Dec. 31,” he said. “If something comes along without it (in place), we’re dead in the water.”

The PILOT program is intended to attract and retain, on a basis competitive with other local governments, businesses that provide the types of employment, capital investment, community involvement and financial impact sought by the local governments for their citizens, according to the policy.

Council member Charlie Hensley said the IDB makes reports on an annual basis, stating information is already available.

“UPF (Uranium Processing Facility) is on hot right now,” said Mayor Tom Beehan in support of the reauthorization. “We need to be on board for these companies. If we falter on this it sends a message ‘maybe Oak Ridge isn’t the place to be.’ This would be a big mistake.”

Beehan was talking about the companies that could locate in or relocate to Oak Ridge because of the proposed multi-billion dollar Uranium Processing Facility.

Page 2 of 3 - Baughn said she didn’t see the urgency in giving away property.

“I just asked for a simple request,” she said. I feel like I’m up against a brick wall. I feel like I’m in a twilight zone.”

Baughn talked briefly about a company that had not succeeded after being put in the PILOT program, but city Attorney Ken Krushenski said the company in question had “been penalized every year.”

Council member David Mosby said the city just "gave away" acres of city property in the center of the city.

“How much property are we willing to put under this?” he asked. “We can’t keep giving away gains in property tax.”

Member Anne Garcia Garland agreed, stating she was “disappointed that companies have been allowed to blackmail us emotionally.” She said companies have to be empowered to succeed.

Member Charlie Hensley, however, said, “It’s not blackmail when a company says it wants to be in Oak Ridge or not. I have a problem with saying we gave something away.

“I believe in the public/private partnership and the PILOT is just another way to help,” he said.

Baughn argued that the city has property taxes for a reason.

“We penalize homeowners and businesses,” she said. “We don’t give them a break. There is nothing to disprove the validity of this program.”

Baughn made the motion to extend the PILOT for six months and then reconsider it.

“This is chicken feed,” Hensley said, talking about the comparison of the small abatements in the program to those of the Department of Energy (DOE).

“DOE self-imposed $30 million in tax abatement and we never say a word. Let’s focus on the big issue,” he said.

“We’re not asking for a lot,” Garcia Garland said. “How well is the IDB doing spending taxpayer money?”

Mosby suggested approving the PILOT and later having a work session to discuss the issues.

Wilson said the IDB members “take seriously spending taxpayer dollars,” stating the board met more than 60 times last year.

“We can’t waffle, say ‘no,’ or the company goes to Knoxville, Roane County or Lenoir City or Loudon,” he said. “All those cities go along interstates. Oak Ridge has no interstate to offer that 10,000 others can so we have to be creative to get them here and stay here.

“When you do something positive, you might tell a few,” Wilson said. “But do something negative and you tell the whole world. Soon you become an unfriendly, uncooperative place.”

Page 3 of 3 - Baughn’s six-month motion failed by a vote of 5-2 with Baughn and Garcia Garland voting for approval. The reauthorization of the original resolution to approve the PILOT was approved by a vote of 5-1-1. Baughn voted no and Garcia Garland abstained from the vote.